DSO: Ofgem regulatory principles and priorities workshop

Louise van Rensburg Edwin Tammas-Williams Alex Walmsley Freya Kerle

June 10th 2019 | Time | Agenda Item | |--------|-----------------------------------------------------------------------------| | 9:45 | Workshop Registration & Coffee | | 10:00 | Introduction | | 10:15 | Detailed Day Overview | | 10:30 | DSO functions and function providers Panel | | 10:30 | DSO functions and function providers Workshop | | 11:00 | DSO functions and function providers Feedback | | 12:15 | DSO functions and function providers Feedback | | 13:00 | Key Enablers Panel | | 13:45 | Key Enablers Workshop | | 14:45 | Key Enablers Feedback | | 14:45 | Key Enablers Feedback | | 15:00 | Break | | 15:15 | Future Insights Presentation | | 16:00 | Workshop Wrap Up | | 16:15 | End | Introduction: Energy System Transition How the DSO work fits into our wider energy system transition work

Frances Warburton 10 June 2019 Facilitating change in future energy systems is an important part of our forward work programme. Our strategy for regulating the future energy system

Our aim is to ensure a regulatory framework that:

• drives innovation, • supports the transformation to a low carbon energy system, and • delivers the sustainable, resilient, and affordable services that all consumers need. How our strategy translates into action

We will deliver our strategy by:

1. Making **best use of existing networks**
2. Minimising costs of **network expansion**
3. Facilitating effective **energy markets to deliver for consumers**
4. Achieving **whole system efficiencies** across energy sectors and vectors

In addition we will:

- Focus **innovation support** on the energy system transformation and increase alignment with other public sources of innovation funding

- Ensure **wholesale market arrangements adapt** to changing landscape

- Providing a **predictable regulatory regime** which supports efficient investment and allocates risks efficiently.

- Ensure **consumers are protected**, in particular those in vulnerable circumstances Future Charging and Access (FCA) reforms

- Electricity Network Access and Forward-looking Charging reform ("Access reform")

  - Ofgem is leading a Significant Code Review (SCR) to develop improved access and forward-looking charging arrangements
  - In parallel, industry is undertaking a review of aspects of allocation of access rights, including improved queue management and the scope for trading;

- Targeted Charging Review (the "TCR")

  - Ofgem is leading an SCR to develop new residual charging arrangements and reform the arrangements which give rise to "embedded benefits"
  - In parallel, industry is bringing forward changes to ensure storage pays proportionate charges;

- Balancing Services Charges Task Force (the "Balancing Services Taskforce")

  - Industry is leading a review of balancing services charges in parallel with the Access reform and the TCR.

Distribution System Operation/Electricity System Operator reforms

- Clarify boundaries and mitigate conflicts
- Enable competitive markets
- Tender network reinforcement as neutral facilitators
- Embed whole systems coordination

RIIO price controls

- Efficiency incentives through totex
- Outputs, including flexibility / option value
- Innovation funding

## How we will deliver the critical components of system transition by 2023

| Work area | Components of system transformation | |----------------------------------|-------------------------------------| | | Make best use of existing networks | Minimise costs of network expansion | Facilitate effective energy markets | Achieve whole system efficiencies (across vectors) | | **Future Charging & Access reforms** | | | | | | Access reforms | | | | | | • Better definition of access rights | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | | | • More cost-reflective forward-looking charges | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | | | TCR | ![Star](https://via.placeholder.com/15) | | | | | • Reduce distortions from residual charges | ![Star](https://via.placeholder.com/15) | | | | | Balancing Services Task Force | | | | | | • Decide if BSUOS forward-looking or cost recovery | ![Star](https://via.placeholder.com/15) | | | | | **ESO/DSO reforms** | | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | Clarify boundaries & mitigate conflicts | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | Enable competitive markets | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | Tender network reinforcement as neutral facilitators | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | Embed whole systems coordination | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | **RIIO** | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | • Efficiency incentives through totex | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | • Outputs, incl flexibility/option value | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | • Extending role of competition | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | • Embed whole systems approach | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | | • Innovation funding | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | ![Star](https://via.placeholder.com/15) | Today’s focus: Distribution system operation

Distribution system operation The decarbonisation, decentralisation and digitalisation of the energy system means new activities are enabled and required to deliver network and system needs:

- DNOs will need to evolve, embed new tools and responsibilities.
- At the same time third parties are increasingly able to deliver solutions to network and system needs.

There is a role for policy makers to create the right environment so that new functions are delivered efficiently and effectively.

At Distribution System Operation level, we want to:

1. Clarify boundaries and mitigate conflicts
2. Enable competitive markets
3. Ensure network companies tender network reinforcement as neutral facilitators
4. Embed whole systems coordination Objectives for today

- **Set out our thinking so far**

  - Describe our priority work areas
  - Present our early views
  - Outline how we will progress this work

- **Use your feedback to inform our policy development**

  - Understand your priorities
  - Test the robustness of our analysis to date
  - Gain perspectives from a diverse range of stakeholders

Summer publication

### Overview of Day

| Time | Agenda Item | |--------|-----------------------------------------------------------------------------| | 9:45 | Workshop Registration & Coffee | | 10:00 | Introduction and context | | 10:15 | Detailed Day Overview | | 10:30 | DSO functions and function providers Panel | | 11:00 | DSO functions and function providers Workshop | | 12:15 | DSO functions and function providers Feedback | | 13:00 | Key Enablers Panel | | 13:45 | Key Enablers Workshop | | 14:45 | Key Enablers Feedback | | 15:15 | Future Insights Presentation | | 16:00 | Workshop Wrap Up | | 16:15 | End |

#### Morning focus

Clarify boundaries and mitigate conflicts

#### Afternoon focus

Enable competitive markets

### Panel Sessions

1. Clarify boundaries and mitigate conflicts

   - **DSO functions and function providers Speakers**
     - Steve Atkins, SSE
     - Charles Wood, Energy UK
     - David Middleton, Origami Energy

2. Enable competitive markets

   - **Key Enablers Speakers**
     - Peter Bingham, Ofgem
     - Keith Bell, University of Strathclyde
     - Richard Dobson, ESC & EDTF
     - Graham Ault, Smarter Grid Solutions
     - Sotiris Georgiopoulos, UKPN

3. Clarify boundaries and manage conflicts

DSO functions and function providers

Panel session

Chair

- Edwin Tammas-Williams, Senior Manager, Energy System Transition, Ofgem

Panel

- Steve Atkins, DSO Transition Manager, Scottish & Southern Electricity Networks
- Charles Wood, Policy Manager for New Energy Services & Heat, Energy UK
- David Middleton, Head of Commercial Innovation, Origami Energy Effective Distribution System Operation is the delivery and coordination of a range of functions and activities. DNOs will embed some of these functionalities in order to facilitate efficient energy networks.

### Long term planning

- Network planning
- Forecasting demand and generation and DER
- Connection studies and operation procedures
- Integrated T-D planning
- DER hosting capacity analysis
- Emergency response planning
- Delivery of new investment
- DER net local value analysis

### Operations, real-time processes and planning

- Switching, outage restoration and distribution maintenance
- Monitor parts of the Dx system under active network management
- Supply of grid-operational services using DER assets
- Identify DERs, ancillary service reqts. and operation restrictions
- Data management and sharing
- Coordination between T-D interfaces
- Supply of grid-operational services using DNO assets
- Coordination of DER schedules

### Markets and settlement

- Aggregation of DERs

- Design of principles of system access and trading arrangements

- Operation of flexibility trading platforms and associated tasks

- Functional analysis drawn from outputs for the ENA Open Networks Project, the Future Power Systems Architecture model, The Helm Cost of Energy Review; Academic literature; internal analyses

- Distribution system operation functions include variable depths of changes from existing operations.

- Functions vary in their integration to DNOs. DSO functions and roles

- DNOs and other parties will need to evolve in delivering existing and new DSO functions

- In some cases, it’s not clear who is best placed – DNO and third party could deliver

  - “Grey areas”

- Economies of scope with DNO core monopoly roles

- Risks of monopolising delivery, or otherwise distorting competition

Examples where discussions have taken place

- Supply of grid-operational services using DNO assets
  - CLASS
- Supply of grid-operational services using DER assets
  - Modulating EV load control
  - Owning and operating storage
- Operation of flexibility trading platforms and associated tasks
- Aggregation of DERs

Ofgem need to make decisions around

- whether, and
- in what circumstances,

should DNOs be able to provide these new functions Steve Atkins (DSO Transition Manager)

Scottish and Southern Electricity Networks owns:

- two electricity distribution networks
- one electricity transmission network
- +100,000 substations
- +130,000 km of overhead lines and underground cables
- +100 submarine cable links

We serve 3.5 million customers across one third of the UK’s landmass. Project LEO/Transition

1. Distributed Energy (sourcing energy)

2. Conflict Resolution (optimised energy shifting)

3. Congestion Management (avoiding reinforcement)

Proactive Flexibility Introduction to Energy UK

Energy UK is the trade association for the GB energy industry with a membership of over 100 suppliers, generators, and stakeholders with a business interest in the production and supply of electricity and gas for domestic and business consumers. Our membership covers over 90% of both UK power generation and the energy supply market for UK homes.

New Energy Services & Heat is Energy UK’s focus on emerging markets, including low carbon heat, low carbon transport, and a smart flexible energy system.

Charles Wood, Policy Manager - NESH Charles.Wood@Energy-UK.org.uk Energy UK positions

1. Neutral market facilitation To ensure market confidence in the impartiality of NO and SO bodies, frameworks must be in place to ensure neutral market facilitation, including removal of conflicts of interest.

2. Competition driving value Competition drives efficiencies and cost reductions for consumers, but market actors cannot compete effectively against paid-for assets.

3. Near-term investment confidence A clear and codified direction of travel is needed for investment decisions to be made now and ensure that enough flexible capacity is online by 2025.

4. A clear role for network assets As charging reforms and RIIO2 development continue, it is important to ensure that active network management and increasingly controllable network assets are given a codified system role. Technology to enhance the value capture for energy companies

Technology key to optimal value capture

- Need to capture optimal value from assets across all value opportunities
- Better decisions from real-time data & control
- Value will change over time, perhaps unpredictably
- Optimising many diverse assets across all service opportunities is complex

Solutions deployed on the Origami platform

Quality shareholders with evergreen capital

David Middleton Head of Commercial Innovation 0788 465 0816 Leveraging existing entities can accelerate the evolution of the DSO ...

... but DSOs only secure flexibility for DNOs and are not otherwise a route to market for flexibility

1. Clarify boundaries and manage conflicts

DSO functions and function providers

Strategy & workshop Our approach

Scope and aims

Framework approach

Implementation

Underpinning analysis

Contestability and ‘grey areas’

Common themes – risks, benefits

Conditions, circumstances of DNO participation Ofgem need to make decisions around whether, and in what circumstances, should DNOs be able to provide new functions.

These decisions should:

a) Reflect **consumer interest**

b) **Be consistent** and **resilient**

c) Provide **confidence to DNOs and third parties** about their roles and the regulatory environment

d) Be made **efficiently**

______________________________________________________________________

**What is the objective of this work?** Delivering these objectives more effectively

**What is not the objective of this work?** *New* stances and positions what good outcomes are. A common framework approach

CEER (2019) New Services and DSO Involvement Our high level framework

Are there operators other than the DNO that currently provide the service, or is the service potentially open to competition?

- **No**

  - Not in scope

- **Yes**

  - Common themes emerge

  Common conditions

  Is there a special justification for the DNO to provide service?

  - **No**

    - Non-DNO activity

  - **Yes**

    - Allowed with conditions

**Common understanding**

We define contestability so that the user can determine *where* the conceptual framework applies

*Where a market substitute does or could exist*

We identify common themes including the risks that justify *why* the conceptual framework applies

We consider common conditions, ie common circumstances or risk mitigations that address those themes

We describe what we would consider a special justification and highlight some relevant criteria

## Common themes emerge

| Vertical integration risks and benefits | Unique competitive advantage | Interaction with neutral monopoly role | |----------------------------------------|-----------------------------|----------------------------------------| | Risk or perceived risk of non-neutral procurement | Unique access to information | Where commercial functions may risk or be perceived to risk neutrality in monopoly functions | | Efficiency gains | Unique access to assets, resources | |

**Common themes**

- **Vertical integration risks and benefits**

  - Risk or perceived risk of non-neutral procurement
  - Efficiency gains

- **Unique competitive advantage**

  - Unique access to information
  - Unique access to assets, resources

- **Interaction with neutral monopoly role**

  - Where commercial functions may risk or be perceived to risk neutrality in monopoly functions Common themes emerge

If...

Vertical integration Unique competitive advantage Interaction with monopoly role

Information Assets

...then

Common conditions

eg, If a commercial service uses assets paid for in price control then... Implementing framework approach

Existing protections!

How we implement will affect differently:

a) Reflect **consumer interest** b) **Be consistent** and resilient c) Provide **confidence to DNOs and third parties** about their roles and the regulatory environment d) Be made **efficiently** x) **Feasibility**

Status

Blanket rules

Expectations

Common understanding of risks

Common outcome focused conditions

Common prescriptive rules

Common prescription Use your workshop feedback • Develop our analysis – themes, conditions, implementation

Wider engagement • Summer DSO publication • Continues policy development

Implementation • Discrete decisions to be made (eg CLASS consulting early 2020) • Consider appropriateness & feasibility of broader implementation options Our approach 20 minutes

Q1. Do you think a common framework is helpful? How would implementation options affect its helpfulness?

Output:

a) (Strongly) Agree/Disagree with common framework approach? b) Outcome focused or prescriptive conditions? c) Expectations or blanket rules?

Underpinning analysis 40 minutes

Q2. Have we identified the right common themes?

Table 1 and 2 start, then after 20 minutes move to Q3

Output:

a) What do you agree with? b) What don’t you agree with? c) What have we missed?

Q3. What conditions do you think are appropriate?

Table 3 and 4 start, then after 20 minutes move to Q2

Output:

• Draft conditions corresponding to common themes Q1. Do you think this framework is helpful? How would implementation options affect its helpfulness?

**Output:**

a) *(Strongly)Agree/Disagree with common framework approach?*

b) Outcome focused or prescriptive conditions?

c) Expectations or blanket rules?

______________________________________________________________________

How we implement will affect differently:

a) Reflect **consumer interest**

b) Be **consistent** and **resilient**

c) Provide **confidence to DNOs and third parties** about their roles and the regulatory environment

d) Be made **efficiently**

x) **Feasibility** Q2. Have we identified the right common themes?

**Output:**

a) What do you agree with? b) What don’t you agree with? c) What have we missed?

Q3. What conditions do you think are appropriate?

**Output:**

- Draft conditions corresponding to common themes

______________________________________________________________________

**Diagram:**

- **Common themes emerge**

  - Vertical integration
  - Unique competitive advantage
  - Interaction with monopoly role

- **Common conditions**

  - Info
  - Assets

- **Decision Tree:**

  - Are there operators other than the DNO that currently provide the service, or is the service potentially open to competition?
    - No: Not in scope
    - Yes: Common themes emerge
  - Is there a special justification for the DNO to provide service?
    - No: Non-DNO activity
    - Yes: Allowed with conditions

- **Example:**

  - If a commercial service uses assets paid for in price control then...

2. Enabling competitive markets

Key enablers for DSO – panel session

Chair

- Alex Walmsley, Senior Manager, Energy System Transition, Ofgem

Panel

- Peter Bingham, Chief Engineers, Ofgem
- Keith Bell, Holder of the ScottishPower Chair in Smart Grids, University of Strathclyde
- Richard Dobson, Technical Collaboration Consultant, Energy Systems Catapult & Energy Data Taskforce
- Graham Ault, Executive VP and DER Operators General Manager, Smarter Grid Solutions
- Sotiris Georgiopoulos, Head of Smart Grid Development, UKPN & Chair ENA Open Networks Workstream 1A “The hardware, software and all associated data and interoperability standards that are required to unlock DSO functionalities, support markets, and deliver consumer benefits through competition.”

**Hardware**

- Network monitoring
- Sensors (create & collect data)
- Comms infrastructure (To transport data)
- LCT interfaces (transports instructions to assets)

**Software**

- Data repository (DNO architecture)
- Access portals (get info from networks)
- Data exchange
- Forecasting (across planning, ops, real-time timescales; resource availability; constraints)
- Planning tools (enhanced)

**Associated data**

- Planning Data
- Asset Data
- Ops Data
- Real Time

**Associated interoperability standards**

- CIM
- IEC61970
- IEC61850
- Cyber security – national infrastructure standards
- Engineering standards review
- Vendor implementations

2. Enabling competitive markets

Key enablers for DSO – panel session Peter Bingham, Ofgem Chief Engineer

June 10th 2019 Organisational view and priorities

- Ofgem is there for the energy consumer, not for picking winners

Key Enablers for DSO

Opening **siloed information** stores can release value, unlock **DSO functionalities**, support markets, and delivery consumer benefits through competition.

Hardware and software improvements will facilitate transformation.

**Data and information to enable DSO**

- Planning data

- Asset data

- Operations data

- Real-time data

- Facilitating Network Access for Flexibility and Low Carbon Generation

- Optimising Network Capacity Usage through smart charging signals

- Investing in Smart Enabling Technology now to maximise network utilisation

- Promoting Competition for Capacity in Networks

- Developing Flexibility Markets and Platforms

- Big Data – Enabling Flexibility Platforms, Smart Technology and Behavioural Change

- Smart Engineering Standards for Traditional Network Investment

- Promoting Resilience (Black Start from DG)

- Local Energy (Enabling energy transactions of energy resources at a local level, community level and regional level) DSO workshop: Ofgem regulatory principles and priorities Key enablers

Keith Bell ScottishPower Professor of Smart Grids at the University of Strathclyde and a co-Director of the UK Energy Research Centre

http://www.strath.ac.uk/staff/bellkeithprof/ http://www.ukerc.ac.uk/ The ENA’s definition of a DSO

A Distribution System Operator (DSO) securely operates and develops an active distribution system comprising networks, demand, generation and other flexible distributed energy resources (DER). As a neutral facilitator of an open and accessible market it will enable competitive access to markets and the optimal use of DER on distribution networks to deliver security, sustainability and affordability in the support of whole system optimisation. A DSO enables customers to be both producers and consumers; enabling customer access to networks and markets, customer choice and great customer service.

Doesn’t a DNO do this?

What are we left with that’s different? Enabling active distribution and optimisation of the whole system

- How much of the distributed energy resource is flexible?
- How might it be encouraged to make itself available?
- For what purposes might it be flexed?
- What do you need to know in order to exercise flexibility in an optimal way? Enabling active distribution and optimisation of the whole system

How much do we know about DER now? How much do we need to know in future?

Need to answer these questions ASAP • Get codes in shape to enable answers

If ICT systems can’t be adapted to different answers to the tiller question, leave them until later

Whose hands should be on the tiller? • What do they need to know? • Do they know why they need to know? – Not just about local thermal limits – Not just about system frequency

Sort out licences, incentives, etc. soon but later

Distribution | Transmission Dr Richard Dobson Technical Collaboration Consultant

Unleash innovation and open new markets to capture the clean growth opportunity

Digital and Data Systems Exploring how digital technologies and data can be used in the future energy system to help inform and shape the strategies and balance the complex risks associated with data privacy, data protection and cyber security. A Modern, Digitalised Energy System

Delivering better outcomes for consumers via superior utilisation of assets, greater price discovery and opportunity to attract new productive assets to the system.

Approach

Filling in the gaps Maximising the value

Digitalisation of the Energy System

New Data Needs Continuous Improvement Digitalisation Strategies

Presumed Open

Discoverable, Searchable, Understandable Structures, Interfaces and Standards Secure and Resilient

Building Blocks

Data Catalogue Asset Registration Strategy Digital System Map Key Enablers for DSOs

Graham Ault, Co-Founder and Executive Director

Smarter Grid Solutions is a DERMS (ANM) software vendor. Combining economic optimization with coordinated autonomous control, 15 operational systems with 4 DNOs and >400 MW under Flexible Management. All types of generation, flexible load and storage in kW to 50MW range. Products and solutions encompass international standards and requirements. Key Enablers for DSOs

DSO DERMS Platform

Advanced Algorithm & Applications

Integration & Interoperability

Architecture based on Open Standards

End-to-end: Customer – DER – Field Device – Comms – Data – App – User Energy Networks Association

Open Networks Project Key DSO Enablers

Sotiris Georgiopoulos Head of Smart Grid Development UK Power Networks Key DSO enablers

Visibility

- Monitoring (targeted rollout at HV/LV)
- Integration of smart meter data & 3rd party data
- APIs and web interfaces for data sharing and exchanges with market parties
- Revamp & Standardisation of industry data exchanges (e.g. LTDS, Week submissions, CIM)

Systems

- Suitable telecoms
- Forecasting
- Power flow optimisation
- Dispatch capability e.g. flexibility services

2. Enabling competitive markets

Key enablers for DSO

Strategy Effective Distribution System Operation is the delivery and coordination of a range of functions and activities. DNOs will embed some of these functionalities in order to facilitate efficient energy networks.

### Long term planning

- Network planning
- Forecasting demand and generation and DER
- Connection studies and operation procedures
- Integrated T-D planning
- DER hosting capacity analysis
- Emergency response planning
- Delivery of new investment
- DER net local value analysis

### Operations, real-time processes and planning

- Switching, outage restoration and distribution maintenance
- Monitor parts of the Dx system under active network management
- Supply of grid-operational services using DER assets
- Identify DERs, ancillary service reqts. and operation restrictions
- Data management and sharing
- Coordination between T-D interfaces
- Supply of grid-operational services using DNO assets
- Coordination of DER schedules

### Markets and settlement

- Aggregation of DERs

- Design of principles of system access and trading arrangements

- Operation of flexibility trading platforms and associated tasks

- Functional analysis drawn from outputs for the ENA Open Networks Project, the Future Power Systems Architecture model, The Helm Cost of Energy Review; Academic literature; internal analyses

- Distribution system operation functions include variable depths of changes from existing operations.

- Functions vary in their integration to DNOs. “The hardware, software and all associated data and interoperability standards that are required to unlock DSO functionalities, support markets, and deliver consumer benefits through competition.”

Key enablers for DSO are aligned and consistent with actions across industries and policy areas.

Ofgem has a clear remit to encourage the development of key enablers for DSO, and to ensure the equitable and suitable delivery of DSO in the interests of the energy consumer.

### Data inclusions

#### DSO improvement

| Data Type | Data examples | |-----------|---------------| | **Planning Data** | Data to share

- Maximum demand index
- 132kV, 33kV Load flow models
- Locational headroom data (electrical engineering parameters MVA flows)
- Reinforcement planning data
- Connection queues
- Fault level data (constraints)
- Single line drawings\
  **NEW data to share**
  - D-FES
  - Load forecasting tools
  - Direct Hosting capacity – usable – what can you connect) | | **Asset Data** | Data to share
- GIS data
- Network topology (static)
- Health index
- Criticality index
- Probability of failure
- Condition assessment data
- EoL estimates | | **Ops & market Data** | Data to share
- Network outage
- Network config
- Working network topology
- Resource availability under SCADA (gen, demand, resources contracted for operations)
- Constraints and conflicts
- Dispatch & control
- Week 24 data | | **Real Time** | Data to share to needs
- Power flows and capacity
- Network resource requirements\
  **NB specific use cases only (ANM curtailment)** |

#### Associated License Condition or codes of conduct

- SLC 25 LTDS
- SLC 51 NAIM
- LTDS FOS Sharing (Excel)
- Not Defined
- Not Defined
- Not Defined
- Not Defined

#### Sharing Mechanism

- Not Defined But Data Exists (CBA)

______________________________________________________________________

As more silos are broken down we may need a mechanism for data coordination, assurance and security. We may need a framework to empower DNOs to publish relevant data. 2. Enabling competitive markets

Key enablers for DSO

Implementation Programme of works

Flexibility dispatch and control DNO data architecture Platforms for flexibility trading Network monitoring

Planning data

Data Type Planning Data

Data to share

- Maximum demand index
- 132kV, 33kV Load flow models
- Locational headroom data (electrical engineering parameters MVA flows)
- Reinforcement planning data
- Connection queues
- Fault level data (constraints)
- Single line drawings NEW data to share
  - D-FES
  - Load forecasting tools
  - Direct Hosting capacity – usable – what can you connect

License Condition SLC 25 LTDS

Sharing Mechanism LTDS FOS Sharing (Excel)

- Consultation on key enablers for DSO
- LTDS review Q3 2019
  - Data format
  - Smart Tools for DSO
  - Network needs information
- Inclusion of above parameters
- Review of applicable parties
- Working groups for development
- Price control preparation

Coordination with industry

Harnessing Open Networks and network operator learnings and products outputs:

- Flex lifecycle
- Key enablers for DSO
- System wide resource register
- Whole system FES
- Real-time data exchange & priority actions
- Conflicts of interest and unintended consequences
- Data exchange in planning timescales
- TSO/DSO & DER data requirements
- WS4 on whole systems: centralised info and dynamic LTDS

WS1B P4 CIM recommendation DNO/ESO learnings: KASM WPD CIM NIA D-FES Ongoing programme of works

Flexibility dispatch and control

- Protect the consumers and participants in flexibility markets
- Delimit conflicts of interest
- Maintain policy optionality

DNO data architecture

- Encourage holistic data standards
- Work with industry on ensuring accurate and accessible data

Platforms for flexibility trading

- Delimit platform task breakdown, merit order and competencies to undertake tasks

Network monitoring

- Review innovation project learning and integrations to DNO BaU
- Undertake cost-benefit analysis of network visibility to inform RIIO-ED2 costs and volumes

Maintain industry and research engagement

### Strategy

**Key Enablers definition and Ofgem approach**

- Do you agree with the definition including hardware, software and data?

**Priority Key Enablers**

- What are the most important key enablers?
- Which data grouping is the most appropriate to focus on post planning data? [Be specific and realistic]
- What is near-term vs long-term?

**Interoperability as a strategic goal**

- Is interoperability key to DSO? Why/why not?

### Implementation

**Programme of works and LTDS**

- Do you agree with the implementation approach from Ofgem?
- Which changes are industry best placed to carry forwards?

**Operational data for DSO**

- How should this be shared?

**What would you do with key enablers in place?**

- What activities cannot be undertaken now that require key enablers?

______________________________________________________________________

Facilitated table discussions and reporting: 25 minutes on strategy and implementation each; use table prompts, report table findings (15 minute wrap up) Ofgem’s Future Insights Series Flexibility Platforms in electricity markets Effective Distribution System Operation is the delivery and coordination of a range of functions and activities. DNOs will embed some of these functionalities in order to facilitate efficient energy networks.

### Long term planning

- Network planning
- Forecasting demand and generation and DER
- Connection studies and operation procedures
- Integrated T-D planning
- DER hosting capacity analysis
- Emergency response planning
- Delivery of new investment
- DER net local value analysis

### Operations, real-time processes and planning

- Switching, outage restoration and distribution maintenance
- Monitor parts of the Dx system under active network management
- Supply of grid-operational services using DER assets
- Identify DERs, ancillary service rqts. and operation restrictions
- Data management and sharing
- Coordination between T-D interfaces
- Supply of grid-operational services using DNO assets
- Coordination of DER schedules

### Markets and settlement

- Aggregation of DERs

- Design of principles of system access and trading arrangements

- Operation of flexibility trading platforms and associated tasks

- Functional analysis drawn from outputs for the ENA Open Networks Project, the Future Power Systems Architecture model, The Helm Cost of Energy Review; Academic literature; internal analyses

- Distribution system operation functions include variable depths of changes from existing operations.

- Functions vary in their integration to DNOs. Future Insights series - Ofgem has developed a view of the future for flexibility trading platforms.

- outlines the finding

- presents an opportunity for open discussion

**Content:**

- What is a flexibility platform?
- The future of flexibility platforms
- Regulatory issues - how could Ofgem respond?
- Standards and harmonisation

"A flexibility platform is an IT platform where the coordination, trading, dispatch and support services for flexibility markets take place."

**Methodology**

- Literature review
- Stakeholder engagement
- Policy discussions

Overall flexibility requirements

- Contracted flex
- Price flex
- P2P platforms
- Platforms for grid services Platforms are made up of a number of tasks or functions

| task | overview | |-----------------------------|--------------------------------------------------------------------------| | Coordination | Alignment with external platforms, markets and actors | | Flexibility Procurement | Match flex provider and procurers | | Dispatch and Control | Dispatch flex asset and maintain system integrity | | Platform Transaction Settlement | Verification and payment services | | Platform Market services | Additional services (credit, qualification) | | Platform Analytics and Feedback | Network assessment, review and improvement |

Tasks of a flexibility platform Tasks of a flexibility platform

Tasks are not created equal

The breakdown is needed for a fully functioning flexibility trading environment

Tasks fit a tier level.

We anticipate that numerous parties will fulfil different roles Tasks of a flexibility platform

Tasks are not created equal

The breakdown is needed for a fully functioning flexibility trading environment

Coordination

- Recognition that multiple platforms are likely to develop within and across geographies
- Coordination between flexibility procuring and selling parties
- Shared standards or potential to trend toward a monopolistic role Tasks of a flexibility platform

Tasks are not created equal

The breakdown is needed for a fully functioning flexibility trading environment

Procurement facilitation

- The task of ‘shop-window’ and ‘match-making’ buyers and sellers of flexibility.
- Currently being taken up by GB innovative businesses.
- Provides a for flexibility services. Tasks of a flexibility platform

Tasks are not created equal

The breakdown is needed for a fully functioning flexibility trading environment

Control and Dispatch

- Highly technical task of managing assets connected to the energy network.
- Grid safety analysis role.
- Requires network data.
- Existing tools and SCADA systems may integrate in task.
- DNO or alternative parties may be able to undertake this role in the future. Tasks of a flexibility platform

Tasks are not created equal

The breakdown is needed for a fully functioning flexibility trading environment

Market services

- Services support flexibility trading
  - credit checking
  - Pre-qualification
- Could be undertaken by specialists from other sectors. Tasks of a flexibility platform

Tasks are not created equal

The breakdown is needed for a fully functioning flexibility trading environment

Settlement

- Services support flexibility trading and balance settlement.
- Could be undertaken by specialists from other sectors. Tasks of a flexibility platform

Tasks are not created equal

The breakdown is needed for a fully functioning flexibility trading environment

Analytics

- Improve the functioning of all platform tasks.
- Data:
  - Inputs and analysis
  - Data privacy

## Spectrum of Flexibility Platforms

| Model | Uncoordinated | Coordinated | Super-platform | Single Market | |----------------|---------------|-------------|----------------|---------------| | **Features** | | | | | | Platforms | Many | Many | Single | Single | | Markets | Many | Many | Many | Single | | Common standards | No | Yes | Yes | Yes | | Governance | Independent | Negotiated | Centralised | Centralised |

### Uncoordinated

- Current GB situation
- Multiple independent platforms
- Limited cooperation or interoperability

### Coordinated

- Numerous platforms across geographies
- Platforms align with principles and interoperable standards
- Providers or purchasers easily operate across platforms

### Super-platform

- Single platform hosting multiple differentiated markets
- Single process of joining or prequalification
- GB wide monopoly – regulation required

### Single Market

- Single UK market

- Single process of joining or prequalification

- Assets and participants automatically allocated locational tags Overlap and coordination between tasks may hold synergies

- availability of information

- sequential processes

- key inputs from another task

### Vertical integration

### Horizontal integration

Standards and harmonisation across platforms to:

- improve the commercial environment
- ensure consumer protections

**Interoperability for: data sharing across platforms**

- keep barriers to entry low
- Drive innovation
- Remedy market imbalance and tipping point

**Interoperability for: Asset and product characteristics**

- Reduce search and transaction costs
- Standardised products or filter assets based on procurer needs

**Interoperability for: procurement process**

- Format & content of flexibility bids and offers
- Single format for transactions can lower barriers to entry Flexibility Platforms in a non-regulated space

Risks to consumers:

- a lack of coordination among the stakeholders causing duplication, efficiency losses, and consumer costs.
- a lack of an independent arbiter or code of conduct leading to poorer consumer protection outcomes.

Ensure protect consumers from the potential effects of:

- development of undue market power
- partiality in dealing with own assets
- non-competitive use of network knowledge
- Restricted innovation benefits to consumers due to illiquid market offerings for flex platforms i. Cross-industry development to drive common standards and methods thereby reducing barriers to entry and lowering costs.

ii. Develop data sharing protocols to allow access to network data.

iii. Monopoly power is a risk for flexibility platforms, whether delivered by the DNO or others.

iv. A shared vocabulary around flexibility market services, platforms and related issues, harnessing existing initiatives.

v. Define and communicate the socialised and community benefits flexibility can deliver. Our core purpose is to ensure that all consumers can get good value and service from the energy market. In support of this we favour market solutions where practical, incentive regulation for monopolies and an approach that seeks to enable innovation and beneficial change whilst protecting consumers.

We will ensure that Ofgem will operate as an efficient organisation, driven by skilled and empowered staff, that will act quickly, predictably and effectively in the consumer interest, based on independent and transparent insight into consumers’ experiences and the operation of energy systems and markets.